Amgen Inc. v. Sandoz Inc., __ F.3d __ (Fed. Cir. July 21, 2015) (Newman (partial dissent), LOURIE, Chen (partial dissent)) (N.D. Cal.: Seeborg)

Federal Circuit affirms dismissal of Amgen’s state law claims, vacates judgment on Sandoz’s counterclaims, extends the injunction pending appeal, and remands for proceedings on the merits of patent infringement.

This case interprets two provisions of the Biologics Price Competition and Innovation Act, codified in 42 U.S.C. § 262(l).  Sandoz sought FDA approval to market a “biosimilar” to Amgen’s product Neupogen®.  Immediately after the FDA accepted its application, but before approval, Sandoz tried to give Amgen notice that it intended to commercially market the product, hoping that this would start certain statutory clocks, discussed further below.  However, Sandoz didn’t provide Amgen with a copy of its application, contrary to statutory provisions that contemplate such disclosure within 20 days after FDA acceptance.  When the FDA approved Sandoz’s product, Sandoz immediately provided another notice of intent to market.

Non-disclosure of Application:  The Act does not require a biosimilar applicant to disclose its application but imposes consequences for non-disclosure.  Section 262(l)(2)(A) says that the biosimilar applicant (Sandoz) “shall provide” its application to the sponsor company (Amgen) within 20 days after the FDA accepts the application, and other provisions describe subsequent procedures in which the two companies negotiate a list of patents that may be implicated and timelines for filing suit.  But section 262(l)(9)(C) says that, if the biosimilar “fails to provide the application,” the sponsor may bring a declaratory judgment claim for infringement, validity, and enforceability of any patent.  When read as a whole, these provisions permitted Sandoz not to disclose its application to Amgen—“shall” in section 262(l)(2)(A) did not mean “must.”  Mandatory disclosure would render section 262(l)(9)(C) superfluous, and the statute provided no procedure for Amgen to compel disclosure.  The biosimilar faces a potential downside from non-disclosure—it loses the right to bring a declaratory judgment of noninfringement because, under section 262(l)(9)(C), only Amegn could bring suit.  But the biosimilar has the right to choose.  Therefore, Amgen’s state law claim contesting Sandoz’s non-disclosure was properly dismissed.

Notice of Intent to Commercially Market:  The other dispute involved a statutory clock restricting the biosimilar’s ability to launch.  Section 262(l)(8)(A) says that the biosimilar “shall provide notice to the reference product sponsor not later than 180 days before the date of the first commercial marketing of the biological product licensed under subsection (k),” and other provisions permit the sponsor to file a patent suit during that period and seek a preliminary injunction.  This language prohibited Sandoz from giving notice before FDA licensure (i.e., approval), because the notice can only be given for a “licensed” product.  If Congress intended a different meaning, it could have referred to a biosimilar that was the “subject of an application,” as it did elsewhere.  Furthermore, the biosimilar product’s uses and manufacturing are not set until FDA licensure, and it makes sense for any preliminary injunction suit to wait until after these things are fixed.  Requiring FDA licensure before the notice of commercial marketing did not improperly extend the sponsor’s 12-year statutory exclusivity.  Most biosimilar applications will be filed (and approved) during the 12-year period, even though the application here was filed much later.

The biosimilar could not avoid the 180-day exclusivity simply by refusing to give any notice at all.  The term “shall” in section 262(l)(8) signals a statutory requirement, and it is mandatory because, unlike with section 262(l)(2), no other statutory provisions specify consequences for failing to meet it.  In particular, section 262(l)(9) didn’t specify such a consequence because it applied only where the biosimilar provides its application to the sponsor, which Sandoz didn’t do here.  Therefore, where the biosimilar refuses to provide its application, it must provide notice of commercial marketing.  Sandoz was thus temporarily enjoined from launching for 180 days from its second notice, and Amgen’s state law claim about the ineffectiveness of the first notice was moot.

Conversion:  Amgen’s state law conversion claim was properly dismissed because it no longer possessed a right to exclusive licensure now that its statutory 12-year exclusivity had expired.

Newman partial dissent:  Judge Newman believed that Sandoz had forfeited its ability to obtain FDA licensure under the Act by failing to comply with the Act’s disclosure requirements.  In particular, she thought that section 262(l)(2) required Sandoz to disclose its application because the “shall” language was mandatory.  Section 262(l)(9) didn’t provide a complete remedy for the sponsor because it does not permit suit on manufacturing patents.

Chen partial dissent:  Judge Chen believed that once a biosimilar applicant decides not to disclose its application, it is not required to give the section 262(l)(8) notice of intent to market, because the sponsor is already permitted to file suit immediately.  He viewed the extra 180-day exclusivity as a windfall to Amgen.